Having operated a small business in Australia since March 2020 has been a ride of ups and downs.
Inflation is at its 20-year high, supply chains are broken, and prices for everything from raw materials to fuel to rent keep going up. For small business operators, it is like being hit by a big wave. But this is where the tricky bit begins: increases in price. You don’t want to lose your loyal customers, do you? It’s not about numbers, it’s about trust. The good news? Aussie small businesses have been getting by on resourcefulness to ride out this storm and make customers smile. Here’s how they’re surviving the battle.
The reality of rising costs
David Weinberger, Metigy’s Head of Growth Marketing, distills it: “Running a small business today means increased costs across the board—thanks to inflation, supply chain disruptions, and higher rents.” Consider a Melbourne café owner. The cost of coffee beans is 25% higher since 2021, freight is now twice as much, and rents are edging up 10%. Margins are shrinking, and price increases could appear inevitable. But, according to Weinberger, businesses need to be strategic.
“You need to think carefully before raising prices,” he says. Cutting your marketing budget might feel like a quick fix, but it’s a mistake. “When you slash marketing, you lose touch with your customers, and that can damage your business even further.”
So instead of slashing your marketing budget, try using AI tools to figure out the best times to post content, like Instagram reels or ads. “AI has leveled the playing field,” Weinberger adds. A Sydney flower shop owner can use free data to keep her ads going without burning through her budget while building up to the price hike. It’s not about being distracted and keeping your customers informed.
Breaking the news the right way
Rob Ranoa, Hypop Founder, knows breaking the news of a price rise the right way is key. “Let your customers know ahead of time,” he recommends. This gives them a head’s up and lets them stock up before they increase prices. For example, imagine a Sydney candle maker sending regular customers an email: “Wax is going up in price by 30% in 30 days—buy your favorite candles now before prices go up!” It’s a smart move—customers think they’re outsmarting the price hike, and it generates sales prior to the change. Ranoa insists on honesty: “Let customers know why costs are going up.
If because of rising petrol prices or workers shortages, they’ll thank you for the candour.” Nearly 60% of Aussies are being pushed around by ballooning cost of living, reports a 2023 survey, so if customers know the jump isn’t to fund your gluttony for more wealth, they’ll appreciate staying on longer.
Keeping It Real with Value Genesis Health + Fitness CEO Ian Jensen-Muir flips the price hike issue on its head. “How to raise prices without customers getting upset is to offer them more,” he advises. For example, his clubs didn’t just increase their fees—they launched new benefits, including Premium membership with extra classes and privileges. Customers weren’t objecting to paying a little more because they were getting better value for money. “Nobody wants to pay more unless they perceive that they’re getting value for it,” Jensen-Muir explains. Instead of just raising your prices, give something extra so that it doesn’t sting. Imagine a Brisbane bakery charging 50c more for its pastries but including a free cup of coffee.
It’s not a price increase, it’s a bonus!
The Key to Keeping Customers: Trust and Transparency Weinberger is stressing the importance of honesty: “To retain customer loyalty, you must keep communicating and keep customers informed of what’s going on.” Even if the prices rise, honesty about why that’s occurring can be the determining factor. Customers will stay loyal as long as they feel they’re being treated fairly. Indeed, a 2023 survey found that 45% of Aussies would rather shop at local stores than the big chains.
So, be honest and up-front about the reasons for the price increase, and your regular customers will forgive you—and return again and again.
The Bottom Line For small businesses, the key is getting the balance between increasing costs and keeping customers on side.
David Weinberger sums it up best: “The key is staying connected with your customers and giving them value, even during tough times.” Ranoa agrees: “Explain the price increase, let them know why it’s happening, and deliver the same—or better—level of service.” Whether by offering more benefits or just being truthful, small businesses that can retain trust and honesty will be better positioned to ride out thisbad time.
Thus, even though it is costly to do business in Australia and on a rollercoaster ride, if you have the right strategy, you can make your customers happy and keep your business afloat.
What if your next price increase could actually strengthen customer loyalty? Discover the hidden strategy that flips the script. News, Price Hike Dynamic Business
